National Minimum Wage penalties to increase

Employers who fail to pay the National Minimum Wage (NMW) will face an increased penalty of up to £20,000, the Government has announced.

The Government will also increase the financial penalty percentage from 50 per cent to 100 per cent of the total amount underpaid.

Under current NMW law, employers must pay the unpaid wages plus a financial penalty of 50 per cent of the total underpayment for all underpaid workers. The maximum penalty an employer can currently face is £5,000.

Regulations introducing the new limits will have to go through parliament and are due to come into effect in February 2014. However, the Government also plans to pass legislation earlier so that the maximum £20,000 penalty can apply to each underpaid worker.

Business Secretary Vince Cable said:

"Anyone entitled to the National Minimum Wage should receive it. Paying anything less than this is unacceptable, illegal and will be punished by law. So we are bringing in tougher financial penalties to crackdown on those who do not play by the rules. The message is clear - if you break the law, you will face action.

"As well as higher penalties, we have made it easier to name and shame employers who fail to pay their workers what they are due. We are working with HM Revenue and Customs to investigate non-compliance and facilitate prosecutions in the most serious of cases."